Assistant Professor of Finance and Business Economics
Email: miao.zhang@marshall.usc.edu
Curriculum Vitae | Google Scholar Page

Research Interests: Labor, Technology, and Finance

Upcoming Presentations:
2024 NBER Summer Institute Law & Econ, 2024 IMF-WhartonIFPR Conference, 2024 Macro Finance Society Workshop, 2024 University of Washington Foster Summer Conference, 2024 Summer Institute of Finance Conference, 2024 WFA,Columbia & RFS AI in Finance Conference, Peking University, 2025 AFA (San Francisco)

Working Papers

The Labor Impact of Generative AI on Firm Values
(with Andrea Eisfeldt, Gregor Schubert, and Bledi Taska)
WSJ | Bloomberg | VoxEU | Barron's (Frontpage Coverage) | Financial Times | Marginal REVOLUTION
*Best Paper Award at the TCU Finance Conference
How do recent advances in Generative AI affect firm value? We construct the first measure of firms' workforce exposure to Generative AI, and show that an Artificial-Minus-Human (AMH) strategy earned 5% returns in the two weeks following the ChatGPT release. This effect is more pronounced for firms with greater data assets and is distinct from firms' product exposure. We highlight that high-exposure workforce can be either substituted or complemented by technology depending on whether their core or supplemental tasks are exposed. Examining firms' labor demand and profitability post-ChatGPT supports the labor-technology substitution channel.

Talent Market Competition and Firm Growth
(with AJ Chen and Zhao Zhang)
How to measure the intensity of talent market competition and how does the competition affect firm growth? This research constructs a new measure of firms' talent retention pressure based on other firms' job postings for talent in the local market. We show that talent market competition substantially dampens firms' capital investment. The effect is primarily on laggard firms' investment but not superstars', leading to a limited impact on aggregate U.S. investment but increased industry concentration.

Revealed Institutional Information Production and Anomaly Returns
(with AJ Chen and Gerard Hoberg)
Dow Jones Investor Attention Panel
18% of WSJ articles mentioned the predictions of institutional investors. This research constructs a new measure of revealed institutional information in financial media using over one million WSJ articles. We show that revealed institutional information stimulates more production of fundamental information via downloads of SEC filings, increases institutional trading on anomalies, and substantially boosts the future anomaly returns, e.g., raising value and momentum returns by 34% to 62%.

The Cost of Regulatory Compliance in the United States
(with Francesco Trebbi and Michael Simkovic)
My NBER CF Slides | NBER Digest | The Regulatory Review | Cato Institute | SLUB | Starling Insights | Marginal REVOLUTION
This research quantifies a firm's compliance costs as its wage bill attributable to employees engaged in regulatory compliance tasks using comprehensive establishment-level occupational microdata. Regulatory compliance costs account for 1.34% to 3.33% of a firm's wage bill and total up to $239 billion. Our findings reveal an inverted-U relation between firms' regulatory compliance costs and their scale of employment with firms of 500 employees paying 40 percent higher percentage regulatory compliance costs than small or large firms. The inverted-U shape is mostly driven by heterogeneous regulatory requirements instead of heterogeneous enforcement.

Published Papers

Under the Hood of Routine Share Decline
(with Nir Jaimovich and Nicolas Vincent)
Economics Letters, 2024, 234(111437)
Using the BLS establishment-occupation microdata, this research shows that the decline in the share of routine-task labor in the U.S. economy is entirely driven by incumbent establishments instead of entrants, casting doubts on the creative destruction mechanism for recent automation.

The Cross-Section of Investment and Profitability: Implications for Asset Pricing
(with Mete Kilic and Louis Yang)
Journal of Financial Economics, 2022, 145(3), 706-724
Asset pricing predictions from the investment CAPM depend on the cross-sectional relation between investment and profitability. This research shows that both investment and profitability premiums are weak when stocks feature high cross-sectional investment-profitability correlation, explaining the insignificant historical investment and profitability premiums before Compustat.

Economic Stimulus at the Expense of Routine-Task Jobs
(with Selale Tuzel)
Journal of Finance, 2021, 76(6), 3347-3399
Slides | Appendix | Data | Media (Tommy Talks)
Do "job-creation" investment tax incentives improve job prospects for workers? This research explores states’ adoption of a major federal tax incentive for eligible firms but not for ineligible ones. Investment incentives increased firms' equipment investment and skilled employees but reduced routine-task employees with a delay of two years, resulting in an overall insignificant effect on the firms’ total employment. We estimate strong substitutability between computers and routine-task labor with an EOS = 3.3, and strong complementarity between computers and skilled labor with an EOS = 0.1.

Labor-Technology Substitution: Implications for Asset Pricing
Journal of Finance, 2019, 74(4), 1793-1839
Slides | Appendix | Data | Replication
*WFA Cubist Systematic Strategies PhD Candidate Award for Outstanding Research
This research shows that firms optimally replace routine-task workers with machines when their productivity is low. Hence, firms with routine-task labor maintain a replacement option that hedges their value against unfavorable macroeconomic shocks and lowers their expected returns. A new measure of firms' share of routine-task labor based on the BLS establishment-level occupational microdata confirms these predictions.

Trading Up and the Skill Premium
(with Nir Jaimovich, Sergio Rebelo, and Arlene Wong)
NBER Macroeconomics Annual, 2019, 34, 285-316
Slides | NBER Presentation | Comment - Daron Acemoglu | Comment - Jonathan Vogel | NBER Macro Annual Discussion
The increase in US income inequality is partly related to households increasing the quality of the goods and services consumed over time. Importantly, this research shows that the production of high-quality goods are more intensive in skilled labor than low-quality goods. Hence, "trade-up" increases the demand for skilled labor, contributing to a rise in the skill premium.

Local Risk, Local Factors, and Asset Prices
(with Selale Tuzel)
Journal of Finance, 2017, 72(1), 325-370
Slides | Appendix | Data
US cities have different exposures to aggregate shocks (local betas). This research shows that firms located in higher "local beta" MSAs face more procyclical factor prices, such as wages and real estate prices. The procyclical input factor prices reduce firms' systematic risks and lower their industry-adjusted returns and conditional betas. The effect is stronger among firms with low real estate holdings.

Suitability Check and Household Investments in Structured Products
(with Eric Chang and Dragon Tang)
Journal of Financial and Quantitative Analysis, 2015, 50(3), 597-622
Using hand-collected survey data from Hong Kong, this research finds that retail investors purchase 8% more structured products when suitability is not checked when distributing banks sell the products. The effect is more pronounced for less financially literate investors. Moreover, investors tend to buy products with lower risk-adjusted returns when product suitability is not checked.

Selected Discussions and Services

Discussion slides for "The Value of Openness" by Della Vedova, Siegel, and Warachka
MFA 2023

Discussion slides for "Surviving The FinTech Disruption" by Jiang, Tang, Xiao, and Yao
SFS Cavalcade 2022

Discussion slides for "Digital Capital and Superstar Firms" by Tambe, Hitt, Rock, and Brynjolfsson [Video]
ABFR Webinar 2021

Teaching and Reading Group

I received the 2023 USC Marshall Golden Apple Award for Core Teaching voted by students.

I co-organize the USC Marshall Macro-Finance Reading Group which meets weekly.